Wal-Mart (NYSE:WMT) is a massive multinational retailer owning and operating a large chain of departmental stores and warehouse stores. In terms of revenue, Wal-Mart is still ranked as the largest public corporation in the world; in all, it is the 18th largest public corporation in the world. Wal-Mart has enjoyed significant growth over the years, which has largely been the result of successful strategic planning and aggressive market expansion policies. As a result, Wal-Mart has been able to increase global market share and reaffirm its strong presence in emerging Asian and Latin American markets.
The company has posted an impressive run since the start of the current financial year, with promising upward growth and impressive revenues. This progress was partly the result of recent news on Asda's market share in the U.K. rising to an all-time high, with growth of nearly 8%. This has also earned the company favorable investor sentiment recently. When we consider the overall capital of this stock, we can understand how huge the business is. The stock has a market capitalization of nearly $206 billion and an average trading volume of almost 9 million. These numbers easily exceed industry standards and have greatly helped the stock in widening its competitive moat.
A promising economic outlook and optimistic investors sentiment has allowed the stock to post a positive upward movement amid predominantly sluggish market conditions. However, what has impressed investors even more is the fact that the stock is now strongly poised at its highest trading value in the last 52 weeks. Moreover, owing to a better-than-expected financial performance in the first fiscal quarter of this year, Wal-Mart announced an increase of 9% in dividends. Apart from this, Wal-Mart has traditionally had an investor-friendly dividend history with an above industry average yield of 2.57%. The price-to-earnings ratio of 13.63 is also impressive, and the stock gives out $0.40 to investors as dividends on earnings per share of around $4.54.
Recently, Wal-Mart has hired developers for its Silicon Valley project in Southern India, a move that clearly confirms the business' strong resolve to invest in the enormous global social media industry. Wal-Mart eventually aims to use the incredible power of social media and smartphone technology to increase the marketability of the business and to attract shoppers. The business redirecting its strategic focus to investing in media is a major strategic decision that I believe will help the company in targeting emerging markets, while also facilitating its plans to increase its share in existing markets.
Another promising recent move by Wal-Mart is its strategic initiative to revamp its local software platform in a bid to tackle growing competition from online competitors. The company is also devising aggressive expansion strategies aimed at widening its competitive moat in the digital content market. Wal-Mart's recent move to add titles from DreamWorks to its video streaming is particularly indicative of the fact that it is aggressively pursuing a higher market share.
There are, nevertheless, some imminent challenges the business faces in the current economic outlook. Latest news on U.S. jobs data has painted a bleak picture that strongly indicates negative economic repercussions for the business. Growth margins in China have also missed sales and revenue targets, and this may require the company to devise new marketing strategies. Although Wal-Mart has not yet betrayed any signs of weakness and continues to post impressive upward movement in its stock, the negative implications of these recent ominous developments are imminent. However, Wal-Mart has a defensive beta of 0.35, which has blessed it with greater resistance to negative market driving factors. As a result, I believe the stock will continue to be a low-risk/high-yield stock in the current fiscal quarter.
Target (NYSE:TGT) would be considered a worthy competitor of Wal-Mart given its impressive market capitalization of $38 billion and average trading volume of $5 million. With the start of the new year, Target had a good run in the stock market amid favorable investor sentiment and aggressive trading. This allowed the stock to close the first fiscal quarter with impressive financial figures. Moreover, the stock has continued with its upward growth so far throughout the second quarter and the future outlook for the stock looks promising. An impressive dividend history has allowed the stock to attract favorable investor sentiment with a dividend rate of $0.30 against $4.29 in earnings per share. However, although Target's financial performance has been impressive this year, Wal-Mart has a higher yield. Therefore, it is certainly a safer and more lucrative investment option when the two stocks are compared.
Although all these leading financial indicators are impressive, Wal-Mart is currently the favorite among investors as a result of its amazing run in the stock. Therefore, Wal-Mart is a better and safer investment option without a doubt.
Carrefour (OTCPK:CRERF) is ranked as the world's second largest retail store (the largest being Wal-Mart, as mentioned above). However, the stock's performance in the current financial year has been wayward and erratic amid mixed market sentiment. In stark contrast to the impressive performance of major competitors like Wal-Mart and Costco (NASDAQ:COST), Carrefour has disappointed investors with a sluggish performance, reporting losses despite a 2.3% increase in sales volume. As a result, investor sentiment for the business is at an all-time low and the future of the stock looks bleak, owing to the unfavorable market conditions and tough economic outlook. Hence, Wal-Mart is certainly a better buy than Costco.
Costco may be called Wal-Mart's traditional rival; with a market capitalization of nearly $38 billion and trading volume of more than $2 million, it is the stock's largest competitor. Costco has gradually reaffirmed its presence in the market, posting solid gains and greater revenues, largely due to aggressive marketing policies and expansion strategies. The stock's impressive performance in the first fiscal quarter turned a lot of investors' heads; U.S. sales increased by 6% while international sales grew by 7%. However, with a greater market share and more impressive performance indicators, Wal-Mart significantly overshadows Costco. Hence, I believe that Wal-Mart is a more lucrative and high-yield investment option. Wal-Mart stock is currently trading around its 52-week high of $68.23, and I think it will reach a new high of $72 by 2013.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.